Government urged to intervene in Google’s App Store payment policy

Korea time


Government urged to intervene in Google’s App Store payment policy

By Baek Byung-yeul

The Google logo is seen at Google's startup campus in southern Seoul in this file photo from September 15, 2021. Yonhap
The Google logo is seen at Google’s startup campus in southern Seoul in this file photo from September 15, 2021. Yonhap

The government should fix Google App Store’s payment policy which requires local app service providers to use its in-built payment system and prohibits external payment methods, as such mandatory measures could increase the user fees that consumers must pay, according to local officials. app service providers and civic organizations, Tuesday.

On March 16, Google asked local app developers to remove their own payment systems, such as external payment links, from their apps, saying developers would not be able to submit software updates for their applications from 1 April. Google added that any app makers that don’t meet the new policy by June 1 could be kicked out of its Google Play store.

The announcement can be read as a counter-response to the country’s law that prohibits app store operators such as Google and Apple from forcing app developers to use only their in-app payment systems.

To curb the market dominance of big tech companies, the National Assembly passed an amendment to the Telecommunications Business Law in 2021 and the revised law came into force on March 15.

In-app payment refers to an app store’s internal payment system. As Google does not allow external payment methods, domestic app service providers are set up to use Google’s in-app payment system and therefore pay Google commissions of up to 30%.

“Google’s action may be interpreted as not complying with the laws of the country. Mobile apps need constant software updates to improve service, but if the App Store blocks updates, app providers won’t be able to work,” said a local app manager. said the developer on condition of anonymity.

Due to new guidelines from Google, local video streaming service providers have increased their monthly subscription fees. On April 1, operators of local streaming services such as Wavve and TVing increased their monthly subscription fees by 15% if users pay their fees through Google Play. Seezn, another streaming service company, said it will let customers know whether or not fees increase in the first half of this year.

“Because Google does not allow external payment methods, streaming service companies must pay a 15% commission to Google if they sell subscription products through Google’s integrated payment system. In addition, all technical specifications must be met by Google, which puts a greater burden on service providers,” an official from a local video streaming company said on condition of anonymity.

In this regard, the Korea Communications Commission (KCC), which oversees the country’s media policies, issued an authoritative interpretation on April 5 that Google’s in-app payment mandate, which caused the rise in service fee price, could be an act of forcing a specific payment method.

“The KCC is determined to impose a fine if the violation is found after an investigation,” the KCC said in a statement.

Civic groups are calling on the government to act. “The KCC plans to wait for the occurrence of illegal activities to verify the violations,” the Seoul YMCA, a local civic organization, said in a statement. “However, the damage to consumers is already underway.”

At a time when app developers are under pressure to increase their service fees, the industry expects the home-grown app marketplace ONE store to take advantage, as it has a 20% fee rate . ONE store also allows app developers to use external payment systems with a 5% commission.

“In order to prevent Google, which runs a huge app store, from strengthening its monopoly power, it is also a good alternative for more companies to offer their services through ONE store,” an official said. a local app development company on condition of anonymity.

“The more companies enter the national app store, the more rooms can be created to counter Google’s exclusive position.”

Data from market tracker Mobile Index showed that ONE store had the second largest app market share in Korea with 13.8% in 2021. The figure was far behind Google’s share of 74.6 %, but exceeded Apple’s 11.6%.

The Korea Times contacted Google Korea’s public relations agency about the matter, but was unable to receive comment.

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Elaine R. Knight